Sunday, September 29, 2013

Labor: The Real Inflation Part 2

      I want to give some more examples on how inflation can destroy the product of a man's labor and what can be done about it.  In my last article on this I gave a few examples as to how insidious inflation can be to the average beginning worker.  The main purpose of this article is to show the young person  how important it is to have some kind of a goal of achievement in mind when approaching the most menial jobs.  And more importantly, how to defeat inflation by understanding the dynamics of economic activity.
     I'm going to take some prices all the way back to when I started in life after graduating from high school in  1965 and I am going to show how much labor it takes to purchase a product or a service.  I am going to use the minimum wage charts from 1965 through 2008 in California instead of the actual figures that I presented in my first article.

Price of cars....

In 1965, the average price of a new car was $2350.00 In 1965 dollars.  In 2013, the average price of a new care is $31,252.  If you take the $2350 and divide it by
 $1.30 it comes out to 1807.69 hours of labor at $1.30 to purchase a new car.  If someone on minimum wage in 2013 wanted to purchase a new car, then would have to work 3906.50 hours in order to purchase the same new car.  Since a man or a woman only has so much labor in his inventory, it makes sense to look at your own labor as an asset, and it is important to get the most money you can from it.  Remember, in these examples, I'm not accounting for income (communist slave) taxes or interest on any loans.  In this example, it would take a wage of $17.54 to earn enough for a new car in 2013 counting hours worked as in 1965.  I'm taking the new price of $31,252 and dividing it by 1807.69 which comes out to $17.54 per hour.  So, between 1965 and 2013 it would take almost twice as much work to earn enough money to purchase a car using minimum wages as a baseline.  It isn't until you get up to $17.54 per  hour does it reflect similar economic conditions.

Price of houses

In 1965, a house would cost about $21,500.00  At $1.30 per hour it would take 16,538 hours of labor to purchase your home.  In 2013, at an average price of $318,900 at $8.00 minimum wage, it would take a whopping 39,862 hours of labor to purchase a home.  In today's market, it would take approximately $19.28 per hour to achieve the same conditions as in 1965.  It takes 2.41 times more labor to purchase a house in 2013 than it did in 1965.

Price of Gas

In 1965, the average price was .31 per gallon, and today it is hovering at about $4.00 per gallon.
In 1965, it would take 14.76 minutes of work to pay for one gallon of gas.  In 2013 at $4.00 per gallon
it would take about 30.76 minutes of labor to earn enough for a gallon of fuel.  That's a fairly consistent rate from the previous example as in today's prices at minimum wage, it would take a total of 2.08 time more labor to purchase that one gallon of gas.

Price of bread

In 1965, the average price for a loaf of bread was .21 and today's price is at $2.20.  When I was a checker in the 60s, I remember the bread being 6 loaves for a dollar.  But for what we are doing here, I'll use .21 which means that it would take 10 minutes of labor at $1.30 per hour to purchase a loaf of bread.  At today's minimum wage, it would take approximately 16.54 minutes to make enough for a loaf of bread.

Labor is the key asset

When it comes to economics, a man's labor is his main value.  The more money a man can make, the more he can get out of his hours worked.  In the cases I just reviewed, the minimum a man or woman should be making is around $20.00 per hour to live a nice middle-class life. Now, I don't include taxes and that $20.00 per hour is take home pay.  And since a man only has so many hours per day he can work, he is limited by the law of nature to just so many good productive hours in a day.

The skills pay the bills

I've use minimum wage as a benchmark for people who are on the lower end of the economic ladder in order to show them that their work is cut out for them, but it certainly is  possible for them to achieve higher goals.  When accepting a minimum wage job, the worker should understand that the job is entry level.  While working, it is important to learn how to manage the workplace to make sure that the worker is always considered an asset to the company.  Any kind of new skill or management techniques can go a long way to finding a better paying job.  However, everyone must start somewhere, but I suggest that a worker never be satisfied with the minimum wage as it can hardly pay the bills.

I believe it is better to have a better skill set than a college degree.  While the college degree may be helpful in opening more corporate doors, the fact is that the specific skills required for a lot of jobs are not taught in college.  The best experience comes from on-the-job-training which can greatly improve one's skills; thereby making the worker more marketable.  Any education should be intended to make the person ready for work and the courses taken should be relevant to the future job.

Labor is limited 

The amount of labor needed to purchase a product or service is almost double that of 1965.  So, the worker needs to know that he must simply make more money or what I call "digits" in order to pay for his own living expenses.  I believe that a worker must always be evaluating and adding to his own skill set if he wants to have a decent life ahead.  There's no point in complaining about prices because it is more productive to acquire the skills to earn more money.


Finding opportunities

Some people like the regular paycheck and enjoy working at large corporations.  While others like myself enjoy working for themselves.  The nice part about working for yourself is that you don't get fired or laid off.  Work opportunities may come and go, but I never fired myself; yet.  I suspect that it is better to be able to exist in both environments.  While I favor independent working, there are lots of people who do very well working for bigger businesses.  The main thing to understand that the only way to keep up with inflation is to either do without products or services or make more "digits" to pay for them.  Keeping up the skill set is critical in being able to find work opportunities.  It is better to work at almost anything that to sit back and rely on government handouts or handouts from the family.

When you work at anything, that the opportunity as far as you can go while you are there. If you work for McDonald's, then go for a management position.  While you may not want to work there as a career, any kind of management opportunities will help you learn basic business skills.  You'll need those anyway if and when you start your own business.  However, always keep in mind that the $20.00 per hour is the bottom end of a living wage scale.  If you can't see your way to that figure within at least a year at minimum wage, then I would start looking for something better.  But even a small amount is always better than nothing.

If you wish to work for yourself, then you will be able to be more flexible.  If you're low on work, then you can charge a little less and keep your business busy.  Many services provided by "employees" are now provided by independent contractors.  Just make sure that your skills fit the type of work you are looking for and if they fall short, do what it takes to acquire those skills so that you may prosper in your business.  Working for yourself is the easiest way to survive business downturns, especially when the unemployment rate starts to go up.  Continually filing resumes only to be rejected time and time again is a rough way to go.  However, even that is much better than doing nothing.

Knowing your goals

Keep in mind that achieving goals is extremely important for your own confidence and maintaining a way to achieve them.  You're always going to learn some kind of skill or lesson--good or bad--that you can take with you and add to your resume.  So, if you have one of those jobs that just doesn't excite you, just figure that this is an opportunity to exercise patience, and get as much out of the job as you can.  This is how you will be able to benefit in your own business, is by watching successful people do their thing to make a good living.  Notice all of the things that they do right and put them in your skill set.

Making it work in a tough economy

In order to keep my sanity, I read very little of the news or watch TV.  Life is challenging enough without adding the evil that comes from the media into my mind.  If there are people on the earth, there will always be some kind of economy, so just get busy and make your own opportunities.  Remember, it takes twice as much work for young people to earn enough money to buy the items listed above, so it is important that you make as much as you can for the hours worked.  It isn't until you get to around $20.00 per hour to get the same economic conditions as I had back in 1965.



Walter Allen Thompson has a new book called Natural Law: The True Supreme Law of the Land

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